AUD/USD Price Forecast: Extends the range play near 0.7050; bulls await 50% Fibo. breakout

AUD/USD continues with its struggle to gain any meaningful traction for the third consecutive day.
A modest USD strength acts as a headwind, though the RBA’s hawkish stance limits the downside.
Traders now look to the crucial US CPI report for some impetus amid a constructive technical setup.

Haresh Menghani FXStreet

The AUD/USD pair prolongs its consolidative price move for the third straight day and trades around mid-0.7000s through the early European session on Wednesday. The Reserve Bank of Australia's (RBA) hawkish outlook continues to act as a tailwind for the Aussie, though a modest US Dollar (USD) keeps a lid on the currency pair.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, preserves its weekly gains as inflation risks stemming from volatile oil prices back the case for at least one rate hike by the Federal Reserve (Fed). This, along with persistent geopolitical uncertainties, supports the Greenback's safe-haven status and contributes to capping the upside for the AUD/USD pair.

From a technical perspective, spot prices have been struggling to extend momentum beyond the 100-day Simple Moving Average (SMA) and break out through the 50% Fibonacci retracement level of the May-June decline. This suggests that the topside progress is slowing but not yet reversing as momentum indicators on the daily chart retain a mildly bullish near-term bias.

In fact, a firm Relative Strength Index (RSI) around 58 and a positive, though modest, Moving Average Convergence Divergence (MACD) reading hint that underlying momentum still favors a grind higher rather than a deeper pullback. A sustained move beyond the 50% retracement near 0.7071 will reaffirm the outlook and lift the AUD/USD pair to the 61.8% level at 0.7120.

Should bulls extend the advance, the next relevant barriers align at 0.7189 and 0.7276. On the downside, initial support is seen at the 100-day SMA around 0.7054, ahead of a Fibonacci cluster at 0.7023 and 0.6963. Meanwhile, deeper demand is expected at the 200-day SMA near 0.6931 and the structural low around 0.6867 if corrective pressure around the AUD/USD pair intensifies.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

AUD/USD daily chart

Economic Indicator

Consumer Price Index (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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